When the Fed makes an open market purchase, long-term real interest rates will ________, which will ________ GDP

The quantity of ________ by households will be less ________

A) saving; the higher is disposable income B) saving; the lower is the real interest rate C) consumption; the lower is the inflation rate D) consumption; the higher is disposable income

In the medium run, a reduction in inflation causes

A) a reduction in the opportunity cost of holding money. B) an increase in the opportunity cost of holding money. C) no change in the opportunity cost of holding money. D) individuals to switch from holding money to bonds and reduce their real money balances.